Benefits debt: 2.4m families hit

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A total of 2.4 million families have racked up family and child care benefit debts over the past three years, new figures reveal.

Figures released to a Senate estimates committee showed 1.9 million families had a family tax benefit debt and 500,000 had a child care benefits debt since 2000-01.

The overpayments, largely caused by families underestimating their incomes, totalled more than $1.8 billion.

But while the number of families accruing debts was easing, Labor says the trend may lead to 600,000 families being hit with debts totalling $500 million for the 2002-03 year.

And a further 150,000 are likely to be hit with debts for child care payments.

Opposition families spokesman Wayne Swan said the government had promised that the cycle of debts would not continue because of better information for families and more careful checks.

Mr Swan said the government was deceiving families by delaying the sending out of debt notices.

"Debt notices for the 2003-04 year were due to be issued from last month, but in a repeat of the run up to the 2001 election, the Howard government has delayed sending the bills to families," he said.

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He said the value of the $600 per child family tax benefits bonus in the Budget would be largely wiped out by debts, which averaged $814 in the March quarter.

Families Minister Kay Patterson said the government was getting overpayments down.

"The number of debts have been reduced, the size of the debts have been reduced and as at the first of September, when families get their $600 per child, we'll see a significant reduction in any overpayment," Senator Patterson told ABC radio.

"But it doesn't take away from the fact that we're increasing the family tax benefit by $600 per child from last financial year and Labor has failed to guarantee that ... beyond this financial year."

Senator Patterson said the government was not delaying the debt notices.

"When people put their tax returns in the first week of September they'll get their $600 increase per child in the family tax benefit ... and it will be taken into account if they have had more than they are entitled to during the year," she said.

Meanwhile, the government said it was unlikely that legislation to fix a problem in the family tax benefit laws would be ready for debate when parliament returned next week.

The laws contained a flaw which would have eroded the value of family tax benefits over four years.

A spokeswoman for Senator Patterson said the amendment would not be rushed as the problem in the current laws would not start to impact on families until mid-2005.

But the minister has promised it will be introduced during the Spring sittings.